The Minimum Wage and the pursuit of a Real Living Wage
In this article, we'll explore the history and growth of minimum wage and the idea of the Real Living Wage, to keep you up to date with the requirements.
The Labour Party manifesto stated that the rates will reflect the cost of living and the current banding system will be reviewed. The Autumn Budget 2024 announced changes from April 2024, and more changes will be announced in due course.
What is the National Minimum Wage?
The national minimum wage was introduced in 1999 and over the years, the minimum wage in the UK has seen revisions to keep pace with inflation and changing economic conditions. The current hourly rates, as of April 2024, are:
| Apprentice | Under 18 | 18 to 20 | 21 and over |
| £6.40 | £6.40 | £8.60 | £11.44 |
The rates from April 2025 will be:
| Apprentice | Under 18 | 18 to 20 | 21 and over |
| £7.55 | £7.55 | £10.00 | £12.21 |
All employers in the UK must use the National Minimum Wage rates as a minimum for all employees. Not paying minimum wage is a criminal offence and authorities will enforce penalties. It is important to rectify any discrepancies as soon as possible.
Who is entitled to the National Minimum Wage?
Every employee in the UK is entitled to the National Minimum Wage or National Living Wage. This includes employees on zero hours contracts and casual workers.
Those on work experience placements, student interns (without promise of future contract of work) and volunteering are not entitled to the National Minimum Wage.
What is the Real Living Wage?
The Real Living Wage is determined by the Living Wage Foundation and is based on the UK's cost of living. It is a voluntary benchmark that reflects the actual expenses required for a decent standard of living. It considers factors such as housing, food, transportation, and other essential needs. It's a guideline for employees aged 18 and over.
The Real Living Wage in the UK is currently £12.60 per hour, and the London Living Wage is £13.85.
What do employers need to do?
Employers need to:
- Check employee records are up to date
- Update hourly rates where an employee's position and age may move them to another bracket
- Check and apply the annual increase in rates (from 1st April)
How we can help
If you would like our help with your payroll, contact our team at TaxAssist Accountants on 01480 592002 or use our online enquiry form.
Last updated: 26th November 2024